Small Business Blog

Cost is one of the most important factors, when choosing a mutual fund. In order to understand the underlying concepts of mutual fund ‘cost’, let me briefly explain the operation mechanism of these funds. The mutual fund acts as an entity wherein money is pooled from investors such as you and me and is invested into destinations such as stock market and money markets, under the leadership of expert fund managers. All the investing is done in accordance with the decided portfolio of the fund. To enter or participate in a mutual fund, you can either buy a policy or a share of the fund and following that you will need to keep on paying off the premium of the fund.

Alternatively, you can invest a large bulk sum in one go. On the returns side, the mutual fund company pays off certain payments to you periodically, or you can withdraw the entire amount from the fund for a ‘Net Asset Value’. In some cases, the withdrawal is termed as a ‘sale’ of the fund share. The conventional life cycle of a mutual fund is divided into 3 phases, installment, investing and repayment of the total principal amount, plus the total return on investment (total repaid amount – total principal amount). Mutual fund companies also tend to charge, in several cases, some obnoxious fees as a kind of service charges or fees to cover up some of their own expenses. These expenses have the following treatment and basis…

Expenses and Cost of Mutual Funds

Conventionally, there are two types of fees which are charged by mutual fund companies.
•Yearly Fees: These fees are the ones which help the company to hire manpower, expand their investment infrastructure and in general, keep the fund and its operations continuously running. All these expenses are usually expressed in a percentage expense ratio, which is known as the Expense Ratio (ER) or the Management Expense Ratio.
•Load: Now the returns, as mentioned above are generated by investing, trading and reinvesting in the stock and money markets. The load is a sort of a fee imposed by brokers or other professionals who are involved in the day-to-day trade. Within the loads, there some fees which cannot be curbed down, whereas there are some fees which can be suppressed. Read the rest of this entry »

Here are some sources: •Life Insurance Policy
•401 (k) plan
•Friends and family
•Credit cards
These are all potential sources that can be tapped into to fund your business. In doing so, you will become your own bank. This will give you full control over your own money. And this control is the very thing you wanted in the first place right? That’s why you chose to become an entrepreneur! If you do have a life insurance policy, then you can now put it to work. Though it sounds weird, think about it – a life insurance policy will provide money to your family and spouse in the vent of your death. What most people don’t know is that you can actually borrow against the cash value of the life insurance policy and then pay it back at flexible rates, on your own terms.

Next, you have the 401 (k) plan from your previous employer – all those monthly statements that you filed away so diligently but never cared to even look at. This is also a great source to fund your business with. Though the whole concept of borrowing money from friends and family to start your business may sound like a simple one because you already have an inbuilt level of comfort and trust with them, you need to understand that there are many risks involved as well. If things go smoothly, then you’ll probably the Donald Trump or the entrepreneurial king of your family or your friend circle. But, if your business goes down the drain, then it will put stress on the relations you had with those closest to you. So, is this risk worth taking?

Now, take a long hard look at your credit card. The one that you used to buy that dinner, your computer, and those new shoes – yes this credit card can help you get your business off the ground. If none of these resources work for you, then you can always take the traditional route and opt for bank loans.

Which Business Loan to Take?

Here are the different types of loans:

Long-term loans are probably the most common types of loans available. These loans can be used a working capital funding source and you can repay them on a monthly basis over a term agreed with your bank or financial institution. Read the rest of this entry »